The concept of an entrepreneurial orientation (EO) to explain
the mind set of firms engaged in pursuing new ventures or
undertaking organizational renewal provides a useful framework
for researching entrepreneurial endeavors. Recently,
Lumpkin and Dess (1996) noted a distinction between
entrepreneurial orientation and entrepreneurship by suggesting
that EO represents key entrepreneurial processes that answer the
question of how new ventures are undertaken, whereas the term
entrepreneurship refers to the content of entrepreneurial
decisions by addressing what is undertaken.

The salient dimensions of an EO emerge from a review of the
entrepreneurship literature (e.g., Kanter, 1983; Miller, 1983;
MacMillan & Day, 1987). These attributes and activities
are captured in a definition proposed by Miller (1983) which
states that an entrepreneurial firm is one that "engages in
product market innovation, undertakes somewhat risky ventures and
is first to come up with `proactive' innovations, beating
competitors to the punch" (1983: 770). Building on
prior literature and Miller's definition, numerous scholars have
used the term "entrepreneurial orientation" to describe
a fairly consistent set of related activities or processes (e.g.,
Ginsberg, 1985; Miles & Arnold, 1991; Morris & Paul,
1987; Smart & Conant, 1994). Although Miller's (1983)
definition can be broken down into four
dimensionsinnovativeness, risk taking, proactiveness, and
competitive aggressivenessmany researchers have identified
and tested only three of the dimensions of EO: innovativeness,
risk taking, proactiveness. In some entrepreneurial
orientation studies, the notion of competitive aggressiveness has
been overlooked; other research has placed primary emphasis on
the competitive aggressiveness dimension of EO (e.g., Dean,
Thibodeaux, Beyerlein, Ebrahimi & Molina, 1993).

A few studies have addressed competitive aggressiveness by
equating it with proactiveness. For example, Covin and
Slevin (1989, 1991) suggested that proactive firms compete
aggressively with other firms. In describing their
entrepreneurial strategic posture scale (1989) these authors cite
three of Miller's (1983) factorsinnovativeness,
proactiveness and risk takingand describe them as follows:

an entrepreneurial strategic posture is characterized by
frequent and extensive technological and product innovation, an
aggressive competitive orientation, and a strong risktaking
propensity by top management (1989: 79, emphasis added)

A similar trend is evident in their 1991 paper which describes
an entrepreneurial posture as a firm's "propensity to
aggres-sively and proactively compete with industry rivals"
(1991: 10). In fact, the 3item proactiveness scale
used in the Covin and Slevin (1989) study is identical to
the"competi-tive aggressiveness" scale used in a 1990
study by Covin and Covin. Although a proactive stance
relative to competitors may be vital to entrepreneurial success,
Covin and Slevin's approach seems to have minimized important
differences between competitive aggressiveness and proactiveness.

We suggest that proactiveness and competitive aggressiveness
are distinct concepts with unique definitions.
Proactiveness suggests a forwardlooking perspective
characteristic of a marketplace leader that has the foresight to
act in anticipation of future demand. This is consistent
with Miller and Friesen's (1978) view of proactiveness as shaping
the environment by introducing new products and technologies, and
with Venkatraman's (1989) definition of proactiveness as
"seeking new opportunities which may or may not be related
to the present line of operations, introduction of new products
and brands ahead of competition, strategically eliminating
operations which are in the mature or declining stages of life
cycle" (Venkatraman, 1989: 949).

Competitive aggressiveness, in contrast, refers to the
intensity of a firm's efforts to outperform industry
rivals. It is characterized by a strong offensive posture
directed at overcoming competitors and may be quite reactive as
when a firm aggressively enters a market that a rival has
identified. This is accomplished by, for example, setting
ambitious market share goals and taking bold steps to achieve
them such as cutting prices and sacrificing profitability
(Venkatraman, 1989), or spending aggressively compared to
competitors on marketing, product service and quality, or
manufacturing capacity (MacMillan & Day, 1987).

Because of these distinctions, we suggest that proactiveness
is a response to opportunities whereas competitive aggressiveness
is a response to threats. That is, proactiveness refers to
how firms relate to market opportunities by seizing initiative
and leading in the marketplace; competitive aggressiveness refers
to how firms react to competitive trends and demands that already
exist in the marketplace. These distinct roles are noted by
Chen and Hambrick who suggest that "a firm should be both
proactive and responsive in its environment in terms of
technology and innovation, competition, customers and so
forth. Proactiveness involves taking the initiative in an
effort to shape the environment to one's own advantage;
responsiveness involves being adaptive to competitors'
challenges" (1995: 457). Proactiveness and competitive
aggressiveness are thus separate dimensions of an entrepreneurial
orientation that may each contribute uniquely to entrepreneurial
success. Therefore, we suggest:

Hypothesis 1: Proactiveness and competitive
aggressiveness are discrete dimensions of an entrepreneurial
orientation.

Chen and Hambrick's (1995) description suggests that
successful firms need to be both proactive and competitively
aggressive. Numerous entrepreneurship scholars have
suggested that all the dimensions of an EO are present
simultaneously in an entrepreneurial firm. That is, prior
researchers have argued that the dimensions of an entrepreneurial
orientation covary, and that the EO construct is
unidimensional (e.g., Covin & Slevin, 1989). Although
it is quite possible that a firm would exhibit both competitive
aggressiveness and proactiveness, we suggest that these two
dimensions may vary independently of each other in a given
context. In other words, a firm may exhibit both
competitive aggressiveness and proactiveness, but their presence
may vary in strength or change over time. This suggests
that firms do not necessarily need to be both competitively
aggressive and proactive in order to be successful. Thus,
the extent to which competitive aggressiveness is related to
performance will be independent of the extent to which
proactiveness is related to performance. Therefore: